What We Do

The development of an international framework for the resolution of cross-border financial firms is key to achieving durable financial stability consistent with sustainable growth of the global economy.

The IIF’s activities in this area are led by the Institute’s Cross-border Resolution Working Group (CBRWG), chaired by Urs Rohner, Vice Chairman of the Board of Directors, Credit Suisse, as an industry’s contribution to the efforts aimed at establishing an effective international framework for the resolution of cross-border financial firms. The work on the CBRWG is carried out under the auspices of the Special Committee on Effective Regulation chaired by Peter Sands, Group Chief Executive, Standard Chartered Plc.

Current Workflow

In May 2010, the Institute published a Report developed by the CBRWG, “A Global Approach to Failing Financial Firms: An Industry Perspective”, outlining the key elements of a framework to make it possible for any firm, irrespective of its size or interconnectedness, to exit the market without causing systemic disruption and without any expectation that taxpayers’ money will be used.

After the May 2010 Report, the Institute has submitted to the Financial Stability Board (FSB) the paper “Preserving Value in Failing Firms” (September 2010) focused on the power for authorities to convert some of the debt of the firm to capital to bring about its recapitalization (“creditor bail-in” or “bail-in”). The paper was largely an exploratory one and did not seek to reach final conclusions on several key issues; however it expressed considerable merit in examining bail-in arrangements further.

More recently, in April 2011, the CBRWG has submitted to the FSB a further submission, “Addressing Priority Issues in Cross-Border Resolution” building on the previous ones mentioned above. This document articulates an industry consensus on a number of key challenges and puts forward proposals for approaching them. In particular, as a basis for a constructive dialogue with the official sector, it addresses three key components of an effective framework for cross-border resolution: (a) resolution planning for the maintenance of critical functions; (b) bail-in mechanisms; and© addressing key cross-border issues.